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US created distortions with climate bill – EU chief

The EU must address “distortions” created by a $430bn (£349bn) US plan to incentivise climate-friendly technologies, the bloc’s chief says.

Some EU members have criticised the US Inflation Reduction Act (IRA), raising fears of a trade war.
There are concerns that tax breaks may lure away EU businesses and disadvantage European companies.

European Commission President Ursula von der Leyen said the EU should “adjust our own rules”.

Under the IRA, American consumers will get incentives to purchase new and second-hand electric cars, to warm their homes with heat pumps and even to cook their food using electric induction.

US President Joe Biden has called it the most “aggressive action” his country has taken to tackle the climate crisis.

But European allies perceive it as anti-competitive and a threat to European jobs, especially in the energy and auto sectors.